RBA cash rate

[Smurf1976]

The price of electricity did not come down, and there is nothing on the horizon that suggests it will come down in the future.

Without dwelling on the details of engineering in an economics thread, the energy industry is a great example of what's wrong with the Australian economy more broadly.

It's not about the method of generation (renewables, coal etc) and it's not about whether the companies are shareholder owned, privately owned or government owned. Those things have some relevance as such, but they're not the crux of the problem that the industry is simply bound up in entrenched inefficiency that no individual company or technology can escape.

That used to drive engineers and other technical people crazy until a realisation occurred that actually it's not just energy that has this problem, it being across much of the economy. Start talking to people in completely unrelated industries and that becomes clear, there's entrenched structural inefficiency all over the place.

I expect the RBA is all too aware of this and that would influence their thinking. Pick an industry, any industry, and there's entrenched inefficiency somewhere - the lack of a recession for the past third of a century has allowed a lot of dead wood to accumulate.

 

[Knobby22]

Ms Bullock made it quite clear I think that the RBA does not see the energy rebates as something that will sustain the inflation reduction.
The silly ploy by the Feds to give almost everyone a rebate was never going to pass muster.
The price of electricity did not come down, and there is nothing on the horizon that suggests it will come down in the future.
Bullock and the RBA see the trimmed mean inflation , which while coming down from 3.8% to 3.4%, as being still too high.
Whether the Bullock and the RBA are correct in their thinking is another matter, but unless there is a drastic change in things, I still do not see a reduction in rates till next year.
Below is the table from the ABS for monthly inflation this year.
View attachment 184815
If I were looking at those figures, I would be scratching to get a trend of falling inflation.
Tomorrow, we get the job vacancies and labor force figures.
Bullock had stated in her speech recently that underlying job strength was one of the reasons for maintaining strength.
The figures would need to show a largish fall to have her change her mind.
The next quarterly inflation figures come out late in October.
The next RBA meeting is in early November, so what will drive the change of attitude before that meeting?
The December meeting may be a possibliity, but once again there needs to be some sort of economic rationale to cut.
Mick

It was 2.7 for August, Underlying inflation, which Reserve Bank governor Michele Bullock said this week was her institution’s main focus, eased 0.4 percentage points to 3.4 per cent.

 

[qldfrog]

Without dwelling on the details of engineering in an economics thread, the energy industry is a great example of what's wrong with the Australian economy more broadly.

It's not about the method of generation (renewables, coal etc) and it's not about whether the companies are shareholder owned, privately owned or government owned. Those things have some relevance as such, but they're not the crux of the problem that the industry is simply bound up in entrenched inefficiency that no individual company or technology can escape.

That used to drive engineers and other technical people crazy until a realisation occurred that actually it's not just energy that has this problem, it being across much of the economy. Start talking to people in completely unrelated industries and that becomes clear, there's entrenched structural inefficiency all over the place.

I expect the RBA is all too aware of this and that would influence their thinking. Pick an industry, any industry, and there's entrenched inefficiency somewhere - the lack of a recession for the past third of a century has allowed a lot of dead wood to accumulate.

and a crazy accumulation of tax ruling, red gren tape plus standards atc..all piling up..a whole sector of our society is paid to produce layer and layers of rulings/laws and rgulation.
They have to add and add and add otherwise their job is gone.
These BS jobs are not only useless for the most but also a great burden on our society and prevent innovation;
look at a very simple one: pool fencing;
Probably unique in the world, a whole industry..but it saves lives..does it? does it prevent some to build pools and have better swimming abilities in kids?
Worse, as a whole set of fees pool inspectors etc are making a living out of these, the regulations are forever touched up, and real innovative solutions like floating detectors raising alarms on a fall, comong in many countries, efficient, cheap and usefu saving even pets lives in the pool are not used here..costing lives, adding to the ever increasing cost of a house here
Productivity has many aspects but a good infrastructure and legal system, education, cheap energy, ability to start and grow businesses ..how many of these areas are not a red or yellow card in 2024 Australia

 

[mullokintyre]

Today the ABS released the retail sales for August.
Retail sales rose 0.7%, and looking at the trend it appears to be increasing at slightly faster rate every month.
This does not bode well for a rate reduction.
Inflation - too many people chasing too few goods.
If the strike at US container ports goes ahead and lasts for any length of time, we will start to see shortages of goods, another blow to inflation busting.
Mick

 

[qldfrog]

Today the ABS released the retail sales for August.
Retail sales rose 0.7%, and looking at the trend it appears to be increasing at slightly faster rate every month.
This does not bode well for a rate reduction.
Inflation - too many people chasing too few goods.
If the strike at US container ports goes ahead and lasts for any length of time, we will start to see shortages of goods, another blow to inflation busting.
Mick

View attachment 185225

What do we get thru these ports?
When is the last time i bought anything from the US , or via the US?
Construction wood maybe?
Mike, i doubt it will have much impact on our inflation, unless by sympathy and should not affect the rates here..Oil is a different matter

 

[mullokintyre]

What do we get thru these ports?
When is the last time i bought anything from the US , or via the US?
Construction wood maybe?
Mike, i doubt it will have much impact on our inflation, unless by sympathy and should not affect the rates here..Oil is a different matter

Australia imported 31billion from the USA in 2023, barely 10% of what we imported from China.
We exported about 13billion to the USA in the same year.
However, the ports of the USA account for a large proportion of freight trade for the rest of the world.
With the JIT principle, the fact that components are sourced from all over the world, means that even small disruptions have a large flow on effect.
The issue is not so much the value of what we imported or exported, its the tie up in freight logistics.
Containers sitting idle, ships waiting to load and unload, not just in American ports, but in ports in other countries as goods that would be shipped to the USA cannot be moved.
If the Chinese cannot export widgets to the USA, then they don't need so much of the raw materials that make the widgets, something that we supply.
These things have a habit of compounding quickly.
Mick

 

[qldfrog]

Australia imported 31billion from the USA in 2023, barely 10% of what we imported from China.
We exported about 13billion to the USA in the same year.
However, the ports of the USA account for a large proportion of freight trade for the rest of the world.
With the JIT principle, the fact that components are sourced from all over the world, means that even small disruptions have a large flow on effect.
The issue is not so much the value of what we imported or exported, its the tie up in freight logistics.
Containers sitting idle, ships waiting to load and unload, not just in American ports, but in ports in other countries as goods that would be shipped to the USA cannot be moved.
If the Chinese cannot export widgets to the USA, then they don't need so much of the raw materials that make the widgets, something that we supply.
These things have a habit of compounding quickly.
Mick

True Mick about ore, containers indeed.i missed that freeze of the chain but not so sure of the overall effect.
For oil, i was more thinking about the current war and effect on gulf oil production and oil prices

 

[mullokintyre]

Westpac sees interest rates satying the same for the rest of the year, then dropping 100 BPS next year in OZ.
In the US, a 50 basis points in December, followed by another 100points in 2025 to finish up pretty much the same as in OZ.


Mick

 

[TimeISmoney]

ANZ boss's major interest rate call that's bad news for homeowners: 'I worry about it'​

 

[mullokintyre]

The last rate increase was in November 2023.
One hopes that there will be no more in this cycle.
Mick

 

[mullokintyre]

to absolutely no ones surprise, but to many homeoeners dissapointment, the RBA kept rates on hold.
Significantly for the Treasurerin particular, nd the Albanese government in general, the minutes state that it had underestimated the level og government spending.
From Evil Murdoch press




Chalmers is making the same mistake that Morrison and the LNP made during the COVID pandemic, increasing the money supply at a time when it should have been shrinking.
It would be less of a problem if it went into something that was in the market sector, but it has gone into consuming public sector orgs

The general public already knows all this. Both the RBA and CBA bank have pointed out that most of the extra income generated from recent tax cust have gone into interest offset accounts for home mortgages.

Mick

 

[IFocus]

Government spending won't stop until after the next election, hence interest rates are unlikely to move until then also.

Direction move a coin toss.

 

[divs4ever]

Government spending won't stop until after the next election, hence interest rates are unlikely to move until then also.

Direction move a coin toss.

i am expecting something nasty to FORCE a rate move ( before the end of 2025 )

the RBA in it's long-held tradition will be late again

how big a move and which direction will remain to be seen

good luck on being on the correct side of the move

 

[mullokintyre]

The RBA is coming under increasing pressure to ease rates, not because inflation has been tamed, but because people are hurting.
Sally McManus who is I gather, an expert on employment, has joined a throng of unionists outside the RBA headquarters protesting about the RBA not reducing interest rates.

From Evil Murdoch Press


Its the first time I have heard that the RBA's job is to ensure full employment.
Melbourne University professor of Economics , Jeff Borland agrees with the ACTU head, though I find his logic somewhat puzzling.




its the first time I have heard that government aligned jobs have a built in protection that stopped them from generating inflation.
Unfortunately the good professor did not go on to elaborate.

ut if the various levels of government are increasing the money supply by paying many more workers, its going to lead to more and more people chasing a finite supply of goods, which is the classic method of generating inflation.
Both professor Borland and the ACTU will be right royally pi$$ed off as the RBA has just announced it is keeping rates on hold.

Mick

 

[waterbottle]

What the hell is a government aligned job and what the hell is a built in protection?

 

[eskys]

Market picked up shortly after the announcement, vertical graph (close enough).... what's so good about it I can't fathom

 

[JohnDe]

The RBA is coming under increasing pressure to ease rates, not because inflation has been tamed, but because people are hurting.
Sally McManus who is I gather, an expert on employment, has joined a throng of unionists outside the RBA headquarters protesting about the RBA not reducing interest rates.

She and her ilk are worried that the Labor party may lose the next election.

 

[Dona Ferentes]

She and her ilk are worried that the Labor party may lose the next election.

if the measure of her sophistication as a lobbyist and representative of a sector of society is to stand in front of a building and shout slogans, then that crowd have lost, already.

 

[Knobby22]

The market has assumed a 50% chance of a cut in February.

Inflation rate appears to be dropping again now.
Pub selling beers cheaper on way home and Aldi has dropped the prices of yoghurt and peaches, as well as other items.

Two more months of this will hurt.
No tax cuts this time.
I do think we are getting close.

 

[qldfrog]

The market has assumed a 50% chance of a cut in February.

Inflation rate appears to be dropping again now.
Pub selling beers cheaper on way home and Aldi has dropped the prices of yoghurt and peaches, as well as other items.

Two more months of this will hurt.
No tax cuts this time.
I do think we are getting close.

With TD at 5.xx%, not too bad in super...